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Scott Salyer's arrest not expected to affect PACA claims against SAFF

by Tim Linden | February 10, 2010
On March 5, a California district court judge is expected to approve the PACA claims procedure in the Salyer American Fresh Foods receivership case, leading to the paying of about $2 million in a PACA Trust claims, according to an attorney involved in the case.

Paul Moncrief, an attorney with Salinas, CA-based Johnson & Moncrief, told The Produce News Feb. 10 that the arrest of F. Scott Salyer the previous week adds an interesting sidelight to the case, but it should have no impact.

"The money for the PACA Trust claims has already been set aside by the receiver," he said. "I believe it was about $2 million, although I don't have those papers in front of me right now. It remains to be seen if that is sufficient to cover all the PACA claims, but I believe it will be."

Mr. Moncrief believes that all the attorneys representing growers and other PACA creditors have signed off on the claims procedure, indicating that their clients will be paid in full. He said that this case has moved more slowly than most, probably because it involved the company going into receivership rather than bankruptcy.

"This is the first PACA Trust case that I have been involved in that dealt with a receivership rather than a bankruptcy," he said. "It definitely moved slower." Since SAFF went into receivership last May, the court-appointed receiver has several times told attorneys for growers that checks covering those PACA Trust claims would be going out soon. Sometimes checks went out, and sometimes they did not.

"I'm not quite sure why it worked that way," said Mr. Moncrief, "but after the court hearing is concluded on March 5, I believe that within about a month, all PACA creditors will get paid."

Patricia Rynn of Rynn & Janowsky in Newport Beach, CA, said that about half of her PACA Trust clients, which number more than a dozen, had received checks from SAFF, and she was still awaiting checks for the others.

F. Scott Salyer, the former owner of SK Foods and Salyer American Fresh Foods, was arrested on Thursday, Feb. 4, at John F. Kennedy International Airport after getting off a flight from London. Mr. Salyer went before a judge the next day in Brooklyn, NY, and was denied bail, according to many news reports of the event.

The Sacramento Bee reported that the owner of the giant food conglomerate, which included two tomato processing plants, the fresh vegetable operation in Salinas and many acres of farmland, was secretly charged in the federal court in Sacramento in early January. The complaint remained sealed until after Mr. Salyer's Feb. 4. Arrest.

Among the more serious charges is that Mr. Salyer was involved in the well- publicized bribery case against SK Foods that has yielded a number of arrests and convictions over the past two years.

Several SK Food employees as well as retail buyers have been convicted of fraud relating to the charges. The schemes involved buyers taking bribes to give their processed tomato business to SK Foods.

Last year, SK Foods and its two processing plants were sold in bankruptcy proceedings to a tomato food processor based in Singapore just weeks before the tomato season began.

Salyer American went into receivership last May and ceased operating several weeks later. Mr. Moncrief, the Salinas-based attorney, said that he does not believe that the firm has been dissolved "but certainly is not operating."

Besides the lawsuit involving PACA Trust creditors, Mr. Moncrief said that other non-secured creditors, as well as some former employees of Salyer American Fresh Foods, have filed suits against the firm seeking damages. Another Salinas attorney, who asked not to be identified, said that there was a "lot of cheering" when Mr. Salyer was arrested. As the case against other SK Foods employees moved through the courts, many questioned why he was not charged.

While his attorneys were quoted as saying that Mr. Salyer has not moved any money out of the country, that allegation was part of the complaint. An FBI agent investigating Mr. Salyer estimated in a sworn affidavit that the former SK Foods president had transferred millions of dollars out of the country, according to The Sacramento Bee.